Ashley Blossom

What are the financial statements and what do they tell about a company?

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The financial statements are the official finance record of any company, organization or person. They are the written records of any company by which a person can interpret and predict the performance of the company. They are mostly audited by government accountants, agencies or firms to make sure the taxes, finances, and investments are accurate.
Financial statements play an important role because the organization depends on its financial data to make important decisions about the future of their company and the investment. These statements are difficult to create so a person can always hire finance writing services to avoid all the hassle. The financial statements are used by analysts, creditors and investors to see the potential earnings of any organization.
There are three types of financial statements:

1. Income statement

2. Balance sheet

3. Statement of cash flows Income Statement:

An income statement is also known as the profit and loss account. This type of financial statement of a company shows the revenues, profits, losses, expenses and the net income that occurred during the year or any other time. It is the main statement of the company. The purpose of the income statement is to show how much revenue the company has earned and how much profit or loss was generated. The income statement can be prepared by two methods that are the single-step method and the multi-step income statement. The single-step method is quick and on the other hand, multi-step income methods have a few more steps to reach the answer. Balance Sheet: The balance sheet is a type of financial statement which shows all the fixed assets, current assets, short term liability, long term liability, and equity. The purpose of any balance sheet is to show that company account. The balance sheet and income statement are important for everyone including investors because they both show the insights of their financial operations. The formula used for the balance sheet is assets = liabilities + equity. It is used to evaluate the business. Statement of Cash Flows: The statement of cash flow includes operating activities, investing activities and financing activities. The operating activities are the first part of the statement of cash flow. It includes all the transactions from all the business activities which start from net income. The investment activities are the second part of the statement of cash flows. It includes profit and losses along with all the cash spent on property or equipment. The financing activities are the last section of the statement of cash flow. This part includes all the money used in financing the business. This part is important because it shows how much money the company has paid through dividends.

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